Property growth slows as rate rises take hold

The housing market is cooling after years of runaway property prices according to the latest figures from property site Rightmove.

The housing market is cooling after years of runaway property prices according to the latest figures from property site Rightmove.

Amid a period of sustained rate rises, which has seen the base rate touch 5.75 per cent, the signs from the firm are that the actions of the monetary policy committee (MPC) could finally be taking hold.

The third interest rate rise of 2007 announced earlier this month, which was pushed through by six votes to three at the MPC meeting, has seen the monthly asking price for property in the UK increase at the lowest rate so far this year.

In total, the average asking price rose by just 0.3 per cent (£684) in Rightmove's figures, with sellers' expectations dampening.

Annual house price inflation has now dropped from 13.2 per cent to 10.3 per cent in June, the lowest yearly rate since September 2006.

Miles Shipside, commercial director of Rightmove, said: "This is further evidence that the 'mini boom' is coming to an end.

"Sellers are going to have to duck and weave with their asking prices," he said, "especially if there is another rise in interest rates."

One noticeable trend that has persisted is the creation of a mini property climate within the capital.

Instead of what was once perceived to be a traditional north-south divide, the London market is the main anomaly, with the annual rate of increase almost double that of most regions in the UK.